KUALA LUMPUR: Malaysian palm oil futures closed lower after volatile trading on Monday, reversing a near 7% jump during early trade following news that a palm oil export ban by Indonesia would cover shipments of refined palm olein but not crude palm oil.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange ended lower 133 ringgit, or 2.09%, at 6,222 ringgit ($1,428.70) a tonne, its lowest closing in nearly two weeks.
Indonesian President Joko Widodo on Friday shocked the market by announcing a decision to ban shipments of cooking oil and its raw material starting April 28, sending palm oil prices to a near six-week high while Chicago soy oil hovered near their highest since 2008.
But the market turned negative after Indonesian government officials told palm oil companies the export ban would cover shipments of refined, bleached, deodorized palm olein but not crude palm oil, two industry sources told Reuters on Monday.
However, there are still concerns that crude palm oil will be added to the list of banned products, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Officials with the trade ministry and coordinating ministry of economic affairs did not immediately respond to requests for comment.
Global edible oil consumers have no option but to pay top dollar for supplies after the ban forced buyers to seek alternatives, already in short supply due to adverse weather and the Russia-Ukraine war.
Countries should slow use of edible oil as biofuel to ensure adequate supply for use in food, the Malaysian Palm Oil Board said, warning of a supply crisis following Indonesia’s policy.
Further denting sentiment, exports of Malaysian palm oil during April 1-25 fell between 10% and 12% from the same week in March, cargo surveyors said.
Soyoil prices on the Chicago Board of Trade fell 1.5%. Dalian’s most-active soyoil contract lost 1.1%, while its palm oil contract gained 2.6%.
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